Meanwhile, over in Egypt… Infrastructure and revolution

New Cairo's mothballed wastewater plant (pic: Orascom)

New Cairo’s mothballed wastewater plant (pic: Orascom)

Muck around with Google Maps’ view of the Cairo conurbation for long enough and presently you’ll see odd dark patches like blobs of paint littering the desert that fringes New Cairo, the eastern outpost of the Egyptian capital. They are pools of wastewater. Egypt doesn’t have the facilities to treat all its sewage, so it tends to dump it in the desert and let nature take its course, as an infrastructure professional over there told me.

As the most populous nation in North Africa (estimated at over 80 million), Egypt has considerable infrastructure needs. Roads are in poor condition, new schools and hospitals are needed. Egypt’s natural resources revenues are not so great that it can do a Qatar and fund it all from sovereign wealth.

And as the population gets more literate, well-informed (the media is far more vigorous than under dictator Hosni Mubarak) and demanding, pressure on the government to improve public works can only get stronger. Mohamed Morsi was toppled as president not just because of a crisis of politics, but because many people perceived that things weren’t getting better. Power and water was repeatedly being cut off; a lack of foreign investment since 2011 was dragging down the economy.

Even before democracy came to Egypt, the state wasn’t blind to the people’s needs. The Mubarak regime that ended two years ago provided relatively stable and efficient institutions of government by Middle Eastern standards. A public-private partnerships central unit was set up to identify infrastructure projects that could be delivered through private finance and procure them. The country’s banking sector is not deep, but deep enough to finance a gentle pipeline of projects. A new wastewater plant for New Cairo secured private finance in 2010, by which time two new hospitals for Alexandria University were in procurement.

But since the upheavals began in 2011, there has been little progress. Post-Mubarak, the PPP unit surveyed its portfolio of projects and tried to whittle it down to the top priorities. Wastewater plants at Helwan and in the 6 October governorate were abandoned. The Alexandria hospitals stagger on, but despite contract signing last year, still haven’t been financed so can’t be built. Another wastewater plant was in procurement when Morsi fell and now looks set to be delayed yet again. And according to reports, New Cairo wastewater, despite being fully built, hasn’t been commissioned. Many other projects, such as a new road connecting Cairo to Alexandria estimated to cost €1 billion, still haven’t gone into procurement.

It’s not just a matter of having a government that lasts long enough to deliver the projects. Banks need stable, reliable contractual counterparties in order to lend money; unstable governments can’t guarantee that they will get their money back. And of course, payment for these projects is in Egyptian pounds, which have taken a hammering on the currency markets as foreign investment has stalled and the population have sought refuge in dollars.

For the sake of the people of Egypt, the new government once elected will need to stabilise the organs of state and get a grip on infrastructure procurement.


About René Lavanchy

You can contact me at rene dot lavanchy at googlemail dot com.
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